Amendment 3 Passed. Now we do the math

Amendment 3 passed last Tuesday with 62% of the statewide vote (65% in Manatee County), which surpassed the 60% threshold needed to add the additional tax exemptions into the Florida Constitution. I’m not going to rehash the risks, or the merits, of this as it’s now final. You can look back on my Substack for posts if you’d like to review my thoughts.

What we should all focus on now is how we’re going to move forward with the tax base of the future. We know that our estimates show $63 million less tax revenue next year and $113 million the following. I’ve seen estimates noticeably higher (up to $150 million in year 2), but even our lower internal numbers are going to cause a significant gap in services.

We still don’t know what the state will do to implement this new law. We know the $250,000 exemption is indexed to inflation, we know they’re directed to continue increasing it up to $500,000 and eventually a full repeal. What we don’t know is what they’ll let local governments do, how they plan to handle shortfalls, or how they intend to work with rural and fiscally constrained counties.

But we cannot sit around idly and wait for them because this isn’t going away and it’s going to come fast.

People keep commenting about how local governments survived in 2008 during the last major downturn, so we’ll get through it. But that’s factually incorrect. Economies move in cycles. Whether it’s the dot-com bubble, the real estate crash, or COVID, everyone knew it would inevitably come back. That’s how cycles work. So, you can put people on part-time, or temporarily close facilities, because you wanted them available when times got better.

That’s not what’s happening here. This isn’t a cycle, this is a permanent, structural shift in how government functions. Forever. A facility that closes, will stay closed. An employee going part time, will never come back full time. A “delay” in a capital project used to mean later, now it means never. The decisions we make this coming year will affect the long-term future of Manatee County, not just the near-term.

And these aren’t “scare tactics”, they’re reality. Before the vote, you could believe people were trying to scare you. After the vote, that’s no longer a viable argument. The vote is over. It’s in the Constitution. I can’t scare you into changing your vote. I can’t scare the state into removing it. What you hear from your local governments now aren’t scare tactics, they’re just facts.

Every elected official is on a ballot in the future. Making this adjustment as painless as possible is in our own best interests.

There is zero reason to try to punish anyone, or make this harder, or lay off more employees, or reduce the quality of life in our own communities, any more than required. If we could keep every library open, every shelter running, and every critical employee on the payroll, we would. We live here too and our goal is to keep making people happy and keep providing a high quality of life. We all just need to figure out what level of quality of life we can now afford.

To give you some sense of the scale of what we can afford, I sat down with staff right after the vote. They rattled off a long list of potential cuts and savings. I would guess that long list didn’t cover $20 million. We need $100 million in year one alone to adjust for the first tier of lower taxes and to fill the current $30-40 million reserve shortfall for the future.

So only $80 million more to go.

A small fraction of this can be covered through minor adjustments in operations via parking fees, launch fees, fee schedule adjustments at parks/facilities, etc. Nominal usage fees that probably should have been in place even before this amendment. The more assets we can essentially turn into self-funded, de facto enterprise funds, the more tax funds will remain for other services and needs.

Clearly, we’re going to need the Sheriff to come in with a material budget cut. (Fire will also need to cut their budgets but they’re not funded through our taxes in Manatee.) We’re also going to need help from other Constitutionals, the courts, State Attorney, and every other aspect of the county budget.

But the heavy lift will inevitably fall on the general services from our Board.

But I’ll tell you what I’m not voting for.

Until we focus on the services and the budget, I won’t vote to increase the millage to shift the costs to renters and small businesses. I won’t vote for any regressive tax shift to make up for this gap. I won’t vote for a new sales tax. Counties and cities all over the state are talking about non-ad valorem assessments, higher sales taxes, and new fees. Doing so could end up with some residents paying more after the amendment than they paid before.

This amendment was sold under the premise of affordability. The people who actually need the affordability are the ones who will be most affected by these new fees and charges. Florida already ranks dead last, 50th out of 50 states, in regressive tax structure according to the Institute on Taxation and Economic Policy, and that was BEFORE this amendment. I’m not going to make it worse.

I fully understand that even the adjustments in services will disproportionately affect those most in need of affordability. Those that need transit, access to libraries for internet/books, affordable options for parks/beaches, free pools in the summer, help from nonprofits. A loss of these services will cost these families one way or another. Whether this is solved through more taxes and fees or through less services, the net outcome of this amendment has inevitably always been the creation of a more regressive, less affordable situation for some people, especially those renting and receiving none of the financial benefits, only the negative outcomes. That was obvious when the amendment was written.

But last week, 65% of Manatee voters said they wanted to forego services and quality of life for lower property taxes. So that’s how this Board needs to cover this permanent gap.

I’ve asked for a full breakdown of every asset we own (libraries, parks, sports facilities, animal shelter, all vacant land) with a complete cost to hold, run, and maintain them. I’ve asked for every CIP project that hasn’t started with the potential future annual costs to maintain and staff them. I’ve asked for every land parcel we own (excluding environmental lands acquired with ballot referendum taxes). We’re not going to build on them, so we need to determine a plan to get it all back on the tax rolls through a sale. I’ve also asked for all our interlocal agreements, TIF plans, membership lists, and nonprofit funding agreements.

What I haven’t ask for is a list of potential new taxes and fees.

So, what do we need to do now?

We start with the assets. We need to look at every one of them and figure out which are not essential and can be closed permanently. Each require staffing, insurance, utilities, maintenance, and carrying costs. If we close one, it should be sold so someone can repurpose it and get it back on the tax rolls. We’re not selling for the nominal, one-time purchase price. We’re selling to avoid the recurring, annual carry costs.

We need to assess the organizational chart of the county. Consolidating departments, lessening/redefining top-level positions, and creating efficiencies with shared resources.

We need to start finding private operators, through long-term leases or outright sales, for assets like sports fields, animal shelters, Powell Crosley, anything we can get off our budget. But speed matters here. There are now 67 counties and 411 cities all thinking the same thing. We’re all in a terrible negotiating position as there are few companies to take these and a massive supply coming online for sale.

We need to halt every CIP project that hasn’t broken ground. We can’t stop a road mid-construction, but we can’t continue to build assets that immediately become long-term, perpetual liabilities. Adding obligations to a budget we’re trying to shrink isn’t prudent. These cuts will, unfortunately, have no impact on our current annual shortfall we’re trying to make up but it will avoid creating future, larger shortfalls.

We need to reassess our reserves. Some are being held for projects that won’t be built. Some, like general reserves, are held as a percentage of a budget that will be significantly less. Two months of reserves for the new budget is going to be less than the current two months’ needs. An assessment of this now would trim down the shortfall target in year one so we don’t over-account for future excess reserves.

We need to unwind all our TIFs. Our future tax revenue is finite, and agreements that lock parts of it into small areas are not fair to the rest of the county.

We need to terminate all interlocal agreements. We’re at the fend for yourself stage now. We can’t keep landscaping for cities, covering school resource officers for the school board who’s still collecting full taxes, or covering expenses for nonprofits.

All discretionary nonprofit funding immediately goes to zero. The children’s services millage (albeit noticeably lower) will still cover some of those programs and adult services are a pass-through of federal dollars. Anything else will be a request we cannot meet. Every nonprofit we currently fund needs to hear from us immediately that they should be prepared to expect less, and maybe nothing, going forward. The same goes for affordable housing developers, who should no longer anticipate gap financing or financial incentives.

We need to look at all the “niceties” that make a community feel like a community. That includes sponsorships, parades, movies in the park, holiday events. Everything adds up when trying to fill such a large hole in the budget. We can’t layoff a needed employee while redirecting their salary to firework displays.

We need to reimagine our infrastructure. We cannot build out any more roads or widen what we have. The construction isn’t the issue due to impact fees. The maintenance is the issue. We are already well behind on infrastructure maintenance today and every mile of new road will require new commitments for milling, paving, lining, and repairing of potholes. This future obligation for current roads is already going to be tough on future budgets without expanding it. We need to put our money into lower-maintenance options to ease traffic like intersection improvements, roundabouts, sidewalks, and trails. Projects that can take cars off the roads and help with traffic flow without the burden of future, endless costs and expensive maintenance.

We need to reassess how we grow and develop. Higher density, infill rentals near existing infrastructure and county facilities are more financially sound than further sprawl. Commercial adds to the tax base and allows for services without government assistance. If we can’t collect the taxes to cover the services expected from homesteaded properties, and we can’t afford to build out future services farther afield, we need to consider height and density in infill locations where those services already exist. We need to understand that stifling housing supply will raise home prices and rents, causing more affordability issues than Amendment 3 is proposing to resolve. We can replace some of the tax base to begin increasing services in the future but it will require a focus on the right developments in the right locations. Much of this was already contemplated in the comprehensive plan changes and needs to be enacted. We need to expedite theses new development patterns and not allow government delays or needless red tape because, the sooner they start, the sooner they get on the tax rolls and provide the housing and commercial tax base we need in the locations we need it.

We need to advocate to the state for the Sheriff to have its own dedicated millage. We’ve discussed this in the past and it’s even more critical now. As mentioned above, we’re going to need a meaningful cut in their budget to bridge this gap. Our minimum core services cannot be compromised by future one-sided budget negotiations with limited funds. We need to allow law enforcement to set their own millage, put forth their own ballot referendums, and work within their own limits to allow current and future Boards the ability to plan ahead with some assurance of revenue that won’t be strained by one department taking a proportionally higher share each year.

Finally, we need to insist the state builds a model right now to test the fiscal viability of every city before it goes insolvent. They need to remove their charters while the cities are sound. The concern is that these cities will just patch things up, letting deferred maintenance and crumbling infrastructure accrue, while providing nonessential services, only to get handed over to the counties in poor condition. Because, when a city fails, the name and the funding go away, but the residents, the buildings, the pipes, the roads, all remain and are forced, in whatever condition, onto the counties, where every county resident will have to bear the burden of repairing them up to minimum standards. This has to be determined now.

George Kruse is an at-large commissioner on the Manatee County Commission. He was elected 2020 and is in the middle of serving his second term. This column was originally posted on his SubStack. Click here to sign up.